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Sunday, 7 October 2012

For anyone familiar with Karl Marx's profligate but cash-strapped life in Victorian London, starring in a BBC documentary series called The Masters of Money is enough to tickle your sense of irony. But as far as understanding the flow and power of money goes, Marx's opus remains unsurpassed nearly 130 years after his death.While the other two programmes in Stephanie Flanders' series, on Keynes and Hayek respectively, were great primers to both those thinkers, it was always going to be Marx who would generate the greatest controversy and cause the hard-of-thinking to, if you can forgive the pun, see red.As you would expect, a great deal of Monday night's programme was given over to explaining the basics with conservatives, Keynes-fans and leftists chipping in with their two penneth worth. So the programme early on establishes (with the assistance of Lego) how capital is compelled to drive down the wages of its employees to reap a maximum return, whereas workers themselves are equally compelled to resist and secure an ever greater slice of the pie.This tension (Flanders' narrative skirts around the term 'class struggle') can play out in two ways. Workers can successfully prosecute their wage claims, which ups the cost of production and forces out of business those capitalists who cannot keep pace absorb their demands. Or it could tilt too far in the capitalists' favour, meaning workers as a collective can no longer buy back the fruits of their labour and the economic system as a whole plunges into crisis.Where the last 30 or so years are concerned, the economic direction of travel has been a journey down the latter route. Real wages in the UK stuttered and then flatlined since around the turn of the last decade. In the USA it has been even more pronounced as the average pay packet has not grown in real terms since the mid-70s. However, productivity in America and in Britain has continued to increase, but has become disengaged from wages as a result of real world processes. Such as the declining clout of trade unions, employment legislation, the move from 'collectivist' to individuated forms of morality, technological change, and the acceleration of globalisation. All of these are symptomatic of what the Regulation School of writers on political economy argue is the move from one 'regime of accumulation' to another.This, for Flanders, provides the backcloth for explaining the 2008 stock market crashes and subsequent recession and stagnation (see here for an elaboration of this argument).Naturally, not all are convinced. Gavin Kelly of the Resolution Foundation suggests that indebtedness was a feature before the crisis hit, and that the shock to the system intensified this problem and made suffering all the more acute. It was not, however, the primary dynamic in play (if not, then what was?) Madsen Pririe of the Adam Smith Institute suggests governments and central banks are to blame for flooding the financial markets in the years leading up to 2008 with cheap money for credit, mainly because politicians did not want to have to face the political effects of a sharp downturn. Personally, I cannot see how this argument renders the Marxian diagnosis null and void - rather, it underlines it.The programme reaches the point where the utility of Marx for professional economics ends. There has always been a tendency in Marxist and Marxisant thought that has tried to prise Marx the analyst away from Marx the revolutionary, such as the 'Legal Marxism' movement of pre-revolutionary Russia, or in more recent time some adherents of the 'Analytical Marxism' school. And this impulse is on show here too. As former IMF chief economist Raghuram Rajan notes, Marx is good for framing the terms of analysing capitalism, but does not have the "appropriate solutions".What would be an appropriate solution? Flanders says that Marx's response is to get rid of capitalism. But replace it with what exactly? As she notes, it seems we are all compromised by the various stakes we have in the system as is, and that might be enough to see off any impulse to widespread insurrection. Not only that though, what alternative to capitalism exists? Marx did not specify what would come after except in the most general of terms. Where Peter Hitchens is concerned, asking if there is another way of organising society is akin to wondering whether there is an alternative to weather. For John Micklethwait of The Economist all that exists are different forms of capitalism, some more benign than others. For former Marxism Today supremo Martin Jacques no systematic alternative currently exists, but that will not always be the case. And for celebrity academic Slavoj Žižek there is no blueprint, it is up to us to find a new way.The framing of this latter question is problematic. Flanders tells us throughout the programme that capitalism contains the seeds of its own collapse. The assumption is that capitalism decays irredeemably and a new way of organising human society wins out, that one stops and another starts. But that is not the case at all and is not how social change works. She notes earlier on that capitalist solutions to a crisis contain the seeds of further crises, such as the decline in real wages in the US staved off an immediate crisis of underconsumption thanks to the provision of cheap credit, in turn fuelled by the large profits accrued through productivity gains. Likewise, as Marx argued in The Manifesto against those earlier socialists who attempted to foist social engineering blueprints onto the nascent workers' movement, socialism is something that grows within capitalist societies. The gravedigger of capitalism is more than just the wage-earning workers and their labour movements. It also encompasses the development of cooperative businesses, welfare states, state-provided health services, state-led economic policy, and the opening up of ever greater areas of society to public scrutiny, democracy, and accountability. All these and more rest on principles that anticipate a society beyond capitalism and, crucially, are absolutely crucial for the stable operation of advanced capitalist economies. We don't need to fashion something new out of the muck of ages when parts of it emerged many decades ago.Obviously, a lot of nuance has been lost in this one hour episode and I imagine the same was true of Flanders' treatment of Keynes and Hayek. Nevertheless 1.2M apparently tuned in, indicating something of a hunger for ideas that can make sense of the mess we're in. If you are looking for a way in to the often abstruse debates around economics, you could do much worse than catching The Masters of Money while it's still on BBC iPlayer.

6 comments:

The programme did not present Marx's view. The basic premise of immiseration it puts forward has nothing to do with Marx. Immiseration, "The iron law of Wages" was developed by Lassalle, and opposed by Marx, who argued that Capital not only could, but needed to raise workers real living standards, and that was compatible, because of Relative Surplus Value, with increasing profits.

From the immiseration premise flows the Keynesian not Marxist theory of crisis based on underconsumption. I set this out in my posts on the programme - Masters of Money - Marx.

I had intended to write another part of that series dealing with the issue of Marx not providing an alternative to Capitalism. Of course, he did in the sense you set out. In Capital III, for example, he says that both Co-operatives and Joint Stock Companies represent the transitional form between Capitalist and Socialist Society, and talks about the way credit could be used to spread Co-operative production on a national basis.

Where obviously I disagree with your comment is in regard to State production and distribution of commodities. Marx and Engels DID NOT, see this as a transitional form or ultimate form of what was to replace Capitalism. Apart from the comments in their youth in the Manifesto, when they were still breaking away from Liberalism, nearly all of their writing is highly antagonistic to an increasing role for the State. Marx is most emphatic in that in the Critique of the Gotha Programme. But, similarly, Engels towards the end of his life was equally opposed to the German SPD calling for the introduction of State run welfare systems and National Insurance, because he said such State Socialism was inimical to the ideas of marxism, for it to be based on real workers ownership built from the bottom up.

Both Marx and Engels, and Kautsky and others emphasised that State production and provision does not represent any change from existing Capitalist production. If anything it facilitates even greater exploitation of workers, and is designed for the benefit of Capital.

Both Marx and Engels emphasise that State production is still the continuation of commodity production, even if the payment for those commodities as with the NHS takes the form of taxes (state insurance premiums) rather than individual payments by consumers of those services.

The Welfare State Capitalist countries has been created by and for the interests of Capital not workers. Socialism is being built behind the back of "men" in society, but it is being built in myriad ways by workers themselves in their collective actions and organisations, not by the State.

Say what you like about him, but he could certainly write. My favourite passage is the one that begins:

"The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations" (and presumably doesn't need to be quoted to readers of this blog).

This is one that I think religious conservatives, nationalists, and what-have-you should consider. But the obvious retort is that people chose and still choose to work in factories because living a feudal life on the land is so utterly shite that just about anything is preferable.

That's why, even though there were a few good things about the Middle Ages, as a liberal I consider that the few advantages were so intimately bound up with misery that the abolition of the old ways is for the best, and now this is also happening in other parts of the world I for one am glad to be witnessing millions lifted out of the absolute poverty that was all their forefathers knew.

Marx, as Stephanie Flanders observed, admired capitalism. But it was only touched upon that profits and self-interest can, almost in spite of the profiting and self-interested, end up being forces for good.

Of course, to my mind, the liberal order with relatively few restrictions (more than a hardline libertarian would want, fewer than a social democrat) is in fact the best way of raising the hitherto impoverished from the state of poverty which 500 years ago was natural, accepted and the will of God. Most likely John Micklethwaite's views are the closest to my own. But I'd agree that the programe is worth viewing by all concerned.

I defer to you on the detail of the specificities of Marx, but I think my point about socialism being anticipated in certain structures in capitalist societies still stands.

I agree, a socialist society is a conscious project and I take the point on the anti-statism of Marx and Engels (interestingly, the bogeyman Bernstein had little time for state provision of welfare too - probably because the relief systems of the German labour movement were so good and delivered on the basis of working class activity). Nevertheless, I think it is difficult not to argue that welfare, the NHS, economic planning (whether by the state or large businesses and cartels) do anticipate, negatively, features of the society to come. They are "unconscious", but run side-by-side the development of the labour movement's political consciousness and can be levers used by the labour movement to bend society more to its will, as well as rallying points for when they come under attack.

Good to see you blogging again. It wasn't just Bernstein. Check out Engels Critique of the Erfurt Programme denouncing the demand for National Insurance, and the idea that worekrs could in any way palce their faith in the Capitalist State for such provision.

I don't believe that Welfarism prefigures Socialism at all. The need for it assumes that workers need a social safety net, which in fact is only a requirement under Capitalism! In the Critique of the Gotha Programme, Marx assumes that everyone who wants to work will be able to, and states the basic Socialist principle "He who does not work, neither shall he eat."

Marx assumes that when workers themselves own the means of production, the current inequalities in wealth and income essentially disappear, so that people are all able to buy what goods and services they require equally, and that includes things like healthcare, and education.

How workers choose to spend their money or labour time vouchers he believes is up to them, and not up to some higher authority to dictate to them. That doesn't mean that they can't set up some kind of national insurance scheme of their own, but his model for it is not the State, but the Workers Friendly Socieites, which is why the First International in its Programme called for the State to keep its hands off them.

Moreover, Marxist Economists working in the NHS in the 1980's theorised the way in which health is provided as a commodity. A Socialist Health service would in fact concentrate on eradicating as far as possible the need to "consume" health, by dealing with the causes of ill-health to begin with, many of which reside within the nature of Capitalism.

As for defending the NHS and other forms of welfare that comes down to the same thing as defending wages against reductions. It comes down to defending Capitalism, defending the continued exploitation of workers by various means, and confining yoursefl to being happy to be only exploited a little less. Marxists, as Marx pointed out in relation to wages "Want to abolish the system of wages".

I'm opposed to a reactionary step of privatising things like the NHS, but only because I want to abolish the NHS in favour of a worker owned and controlled provision of health care.

Its certainly true that larger organisations and planning presage a future society, but there is nothing socialist or leading to a socialist consciousness in them. They are just as compatible with fascism, and the kind of state control and planning that Hitler introduced. In fact, precisely ebcause they are designed in the interests of Capital and its State, more so.

The basic assumption of Marx far more than these large organisations and planning is the starting point of worker ownership and control. After all, how can you have State ownership and provision when you beleive the State should whither away? Lenin recognised that too, too late. Read his 1924 article on the Co-operatives, where he argues that they had made a mistake in not promoting Co-operatives as the necessary socialist form, even alongside all of the market aspects of NEP.

As you might expect, I believe leaving things to the anarchy of the market has led us to the mess we're in today. But full on debates over markets vs other forms of economic organisation is probably too much for a humble comments box ...

I'm not at all arguing in favour of markets other than in the sense that Marx and other Marxists including Lenin and Trotsky did i.e. we can't simply abolish them.

The counter argument would be every attempt so far at repalcing them be it rationing in WWII, or for things like Wimbledon tickets, or be it that attempted in Eastern Europe resulted in not just even greater economic disarray, but also considerable other negative political and social consequences.

By contrast, every firm of any reasonable size engages in some form of planning, and building planning from the ground up, based on real human relations integrating the individual plans of worker owned firms seems a far more likely way of both gradually superseding the market, and of meeting the needs of consumers.

But, it has to be said that most of the mess we have today is not due to the market today, but is due to capitalist ownership rather than workers ownership, and the consequences of that in the way Capital is allocated.